Our productivity not up to it… Top earners; where they live… The world’s 20 richest… Water plan delays… NSW highest taxed state… Skype hits milestone… Late payers rife

US productivity out of Australia’s reach

Australia will probably never reach the productivity levels achieved in the US, and it is unrealistic to even try, according to a new working paper by Productivity Commission researchers.

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Australia’s isolation from large markets, its wide open spaces and thinly spread population factor mean that higher transport costs, diminished economies of scale and less specialisation will always limit productivity, the paper’s authors say.

Australia is about 83% as productive as the US, a gap that is set to widen 3-4% over the next 20 years on current trends, according to the paper.

But the productivity gap isn’t uniform across the economy. Australia’s mining and agriculture industries are much more productive than the US, while the manufacturing, retail and wholesale sectors lag behind.

The paper’s authors say Australia can close the productivity gap by implementing policy changes to improve transport, energy and communications infrastructure, better economic incentives and more developed skill and research capabilities — but only by 4-5% over the next 20 years.

And the paper provides tacit endorsement for Labor’s commitment to improving productivity through increased spending on education, reporting it is likely that “improvement in the quality of education could underpin higher Australian productivity and workforce participation”.

ANZ head of Australian economics Tony Pearson endorsed the papers findings: “There are some unique features of our economy relating to geography and population that makes it intrinsically unable to reach US productivity levels.”

Pearson says Australia can still succeed in areas such as manufacturing by developing strengths in high quality speciality manufacturing, but will never be able to compete with China or the US in making mass volume goods.

— Mike Preston

Big earners: where they live

Want to hire anyone from Peak Downs or Groote Eylandt? Be prepared to pay them a fortune.

In astonishing figures just released by the Australian Bureau of Statistics, employees in mining areas of Queensland, South Australia and the Northern Territory have the highest average wage and salary incomes in their state/territory.

The top 10 areas with the highest average income from wages and salaries were metropolitan areas of NSW, Victoria and WA. As expected the bulk of people in these areas were professionals.

Top area in each state/territory with the highest average wage and salary income for 2003-04:

Water plan delays

More problems getting the $10 billion water plan off the ground; this time from the National Party. The Nationals insist that buying back irrigation licenses from landholders should only be a last resort. This is contrary to statements by Prime Minister John Howard and others that the Federal Government will buy irrigation entitlements. The Government has already announced $3 billion that includes buying back licenses.

High taxes in NSW; and nowhere to drown your sorrows

Taxes in NSW are the highest of any state, Treasurer Michael Costa admitted to Sydney radio 2GB yesterday. But he offered suffering NSW taxpayers nothing more than a tax review to be conducted after the election on March 24.

Costa said he will ask the NSW Independent Pricing and Regulatory Tribunal to conduct a review into the efficiency of state taxes, but would not commit to tax cuts.

And The Australian Financial Review reports that liquor licence applications in NSW have fallen sharply since licensing reforms designed to increase competition were introduced two years ago. Just 16 applications have been lodged since the reforms were introduced, 83 less than in the preceding two years.

IT News

eBay, the company that paid billions for internet phone company Skype, has just celebrated Skype’s half billionth download, making it one of the most popular free downloads ever, reports IT Wire.

Skype has put the fear of God into the world’s telecommunications companies who can see Skype traffic on their network, but can do little about it, fearing a massive backlash from consumers should they dare to block or otherwise interfere with Skype traffic.

Late payers

Signs continue to emerge that record debt and higher interest rates are influencing people’s capacity to pay back debt.

There is an increase in mortgage payments more than 30 days in arrears in Australia, reports Moody’s Investors Services, with arrears increasing to 1.26% of outstanding loan balances in December 2006. This is the highest level since 1997. Delinquency in low-doc loans remains at double the level for residential mortgage-backed securities.

APEC forum discussions

COSBOA has welcomed the discussions at the Small and Medium Enterprises Ministerial Meeting of Asia Pacific Economic Cooperation (APEC) in Hobart today. The panel representing 21 countries discussed improving business education, cutting red tape and increasing SME use of the internet in dealing with government.

Economic round-up

Analysts expect US employment figures, seen as a crucial measure of the US economy’s health due to be released later today, to show the US economy to have added 100,000 jobs in February — anything less than that is likely to trigger selling on US markets.

In the meantime, the S&P/ASX 200 is up 0.36% on yesterday’s close to be trading at 5843.5 at 12.15pm. The Australian dollar was US77.94 cents at 12.15pm, up from US77.65 cents at yesterday’s close.

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